MR. DUFFY: Good morning. Let me update you on the President's
schedule. Yesterday, after arriving, he went out and did some cutting
and clearing brush, and then was at his home on the ranch. And this
morning he had his normal intelligence briefings, and he was out this
morning clearing some brush and is right now -- or has just recently
concluded a bicycle ride and he'll be spending the rest of the day at
home with his wife and mother-in-law.

I've got a couple of books that the President brought with him to read
over the holiday. One is, "When Trumpets Call, Theodore Roosevelt After
The White House," by Patricia O'Toole, recommended to him by Brian
Williams. The other is, "Imperial Grunt, The American Military On The
Ground," written by Robert Kaplan.

And that's what I have on his schedule.

Q Will there be any bill signings?

MR. DUFFY: Bill signings? There's nothing to report at this point,
Deb. As the Congress was late to adjourn, we have several days here
before he needs to sign some things. But I'll let you know. I've been
keeping close contact on any bill signings.

Q To follow up on last week, you know that New York Times story that
talked about the NSA, and how the government was doing much broader
surveillance than the White House has acknowledged. Are you familiar
with that story?

MR. DUFFY: Yes, I saw the story. We'll be declining to comment on any
specific operational details. The program -- I think the President said
in his press conference and the Attorney General briefed very heavily
about, the President's most solemn obligation is to protect the American
people, and he will continue to do that. He has the authority granted
to the President by the Constitution and it's in line with protecting
the civil liberties of all Americans. But we'll decline to --

Q Does the White House still stand by the claim that the order that
he issued only allows eavesdropping on a limited number of people with
al Qaeda links?

MR. DUFFY: This is a limited program. This is not about monitoring
phone calls designed to arrange Little League practice or what to bring
to a potluck dinner. These are designed to monitor calls from very bad
people to very bad people who have a history of blowing up commuter
trains, weddings, and churches. And the President believes that he has
the authority -- and he does -- under the Constitution to do this
limited program. The Congress has been briefed. It is fully in line
with the Constitution and also with protecting American civil liberties.

Q One more thing. Did the telecommunications companies that were
helping out, did they know what they were helping out with? Were they
briefed about the program?

MR. DUFFY: Again, I'm going to decline to comment on any specific
aspects of the program.

David.

Q If I could just follow up on that for a second. In the briefing we
had at the White House last -- a week ago, Monday, I think it was
General Hayden who said at that time that the technology of the program
was such that you could only pick up international calls. And he seemed
to suggest at the time that a broader program would not have been
technologically possible, even if authorized. Your unwillingness to go
repeat that, and not discuss the operational details after the story
might be interpreted as suggesting that General Hayden's comment no
longer stands. Would that be reasonable?

MR. DUFFY: I don't think so. I pointed back to the briefing on Friday
by General Gonzales and also by General Hayden. I have nothing more to
add to it. I mean, his comments stand. I'm declining to go into any
specific operational aspects of the program because General Hayden and
General Gonzales briefed on it and I don't have anything more to say.
That's all.

Jessica.

Q Was the President accurate in the news conference when he said that
the eavesdropping program only focuses narrowly on people with al Qaeda
ties or affiliates?

MR. DUFFY: Yes, the President was accurate.

Q And one more question. UPI is reporting that the reason why -- let
me find it real quick. That the reason -- that the U.S. decided to skip
seeking warrants for international wiretaps because the court was
challenging President Bush at an unprecedented rate.

MR. DUFFY: I'm sorry, can you say that again, Jessica?

Q That the reason U.S. President George Bush decided to skip seeking
warrants for international wiretaps was because the court was
challenging him at an unprecedented rate.

MR. DUFFY: The President has already addressed how this program was
done within the law, and I don't have anything more to add to that.

Q So no comment on the specific of -- was the President being
challenged at an unprecedented rate?

MR. DUFFY: I'll leave it where the President left it in his news
conference.

Yes, Dana.

Q When the President said that -- described this program the way he
did in his news conference, did he mean to suggest that it is only
limited to eavesdropping on ongoing phone calls, or did he not mean to
sort of limit it to just that? I mean, the impression that he left was
that the program is just about eavesdropping on conversations as they
happen.

MR. DUFFY: I'll have to get back to you on that question, Dana. I'll
take that.

Q The administration has made an attempt to stress that this only
involves people with ties to al Qaeda. Might it also include others who
would have intentions to harm the U.S. who are not explicitly tied to
that organization?

MR. DUFFY: I'll leave it to where the President and the General and
General Hayden said; it's people with ties to al Qaeda and terrorist
activity.

Q Trent, will the announcement by Bulgaria and Poland and Ukraine
about troop withdrawals from Iraq affect America's ability to begin
withdrawing its troops next year?

MR. DUFFY: I'll decline to speculate about U.S. troop deployments.
Those are questions that the President has always left to his military
commanders in the field. The President has said repeatedly that as the
Iraqi forces are stepping up and are trained and are capable of
protecting the Iraqi people and doing the security mission, that U.S.
forces will step down. International countries' obligations or
commitments to Iraq are those countries' decisions to make -- decisions
to be made by those countries.

Q Was the White House aware of the troop withdrawals that they
announced earlier today? Or was there any communication between the
White House and --

MR. DUFFY: I don't know. I can check on that, Warren. But, typically,
it's as we've said all along -- a country's decision on whether, or what
level to support the mission in Iraq, either with troops or with money,
or with other resources, is the country's decision to make on its own.
And we respect those decisions.

Mark.

Q Trent, is the President or his senior staff doing much work on
setting and planning for the agenda for the New Year?

MR. DUFFY: I think the President will begin the new year very much in
the way he left -- or he will end 2005, which is to discuss the
country's two top priorities, being keeping our economy strong and
growing stronger and creating jobs, and also winning the war on
terrorism. And that specific front in the war on terrorism is the
conflict in Iraq. So he finished the year discussing those two top
priorities and he will begin next year continuing to talk about those
two top priorities. And he is in the process, as he always is at this
time of the year, reflecting on 2005 and looking forward to 2006 and
what he wants to accomplish for the American people.

Q Has he met with speechwriters to start laying the groundwork for
the State of the Union?

MR. DUFFY: Not at this point.

Q Is the State of the Union tentatively scheduled for January 31?

MR. DUFFY: As you all know, the Congress makes the specific invitation
on the State of the Union, and we'll await their announcement.

Q Speaking about the economy, early surveys show that the retail
spending is up, but not as much as analysts hoped it would be. How does
that fit in with the administration's feeling that the economy is
growing strong?

MR. DUFFY: I'm sorry, I can't -- retail sales --

Q Retail sales -- spending was up over the holidays, but analysts say
it's not as much as they expected. Can you talk more about how it fits
in line with the administration's claim?

MR. DUFFY: Obviously, the reports are still coming in. The retail
sales, at least we know appear to be up, projections are. But one of
the things that we do know is it takes quite a while really before all
the data is in. But the fact is the retail sales are up, and that's in
line with all the very good, strong data that we've seen in the past
several months, which are increased job creation, lower gas prices,
increased business and personal investment. So all the signs are
pointing to a very healthy and strong economic outlook for the
near-term.

Jessica.

Q As you know, members of Congress, especially many Democrats, are
gearing up for the hearings on the spy issue, and on the limits of
presidential power. There's a lot of political tension around this
issue. Has the President, himself, reached out to any Democrats in the
Senate to discuss this with them personally?

MR. DUFFY: I'll check on the President's specific involvement. The
White House has briefed the leaders in Congress, as the President
indicated, repeatedly, over a dozen times, as has been noted. And we
continue to do that. This is a war on terror that requires different
thinking and a desire to connect the dots ahead of time. That's what
the 9/11 Commission showed; that was the collective view of people in
and out of government after the 9/11 attacks. So the President is doing
all he can to make sure that the U.S. government doesn't fail the
American people again.

Q Can you confirm the report in today's Washington Times that says
the U.S. is putting sanctions on several Chinese firms for selling arms
materials to Iran?

MR. DUFFY: I'll have to check on that, Caren.

Q Did the President bring any guests with him on this trip, and/or
does he plan to have any particular people come while he's here?

MR. DUFFY: The President's mother-in-law, Mrs. Welch, was on the plane
yesterday. I'll check on any further guests.

Q Are the daughters here?

MR. DUFFY: No.

Q Who is staffing him, senior staff?

MR. DUFFY: Mr. Hagin; Mr. Lago, from the National Security Council --
Phil Lago; Bill Burck, and yours truly -- along with the honorable Blake
Gottesman.

Q Trent, should we read anything into the fact that he's got three
years left and he's already reading a book about what it's like to be
out of office?

MR. DUFFY: The President is a history buff -- you know that as well as
anybody. He does read a lot of books based on recommendations, and
Brian Williams recommended it to him, so he picked it up and he's
reading it. He is an avid reader. And the President knows full-well
that he's got a lot of time left in this second term and he's going to
accomplish big things, as he has talked about repeatedly.

Q Why "Imperial Grunt"? Kaplan is pretty critical of Iraq. Do you
have any idea why he picked that book?

MR. DUFFY: The President is an avid reader. He reads books of all
kinds and stripe and persuasion. And he decided to read it.

Q Should we hold open the possibility -- and visit in town or
anything? Is that a possibility?

MR. DUFFY: You have to forgive me -- can you repeat that?

Q I know you don't preview his movements, but is it likely at all
that he might consider coming off the ranch and visiting town, or
anything like that?

MR. DUFFY: We'll keep you updated on the schedule.

Q On the Patriot Act, how are you guys going to go forward on that?
How is the White House going to go forward on getting what they want on
the Patriot Act?

MR. DUFFY: The White House is going to continue to push for what the
President said. He wants a permanent extension of the Patriot Act and
those 16 provisions. The Patriot Act is a vital tool in combating
terrorism.

Q No new strategy there? Same strategy going forward?

MR. DUFFY: The new strategy is the same as the old: Give law
enforcement the tools to defeat terrorism.

Q Is he contacting any of the Republicans directly during this week?

MR. DUFFY: During this week? I'll update you if there's any calls we
want to let you know about. He's determined to see the Patriot Act
renewed. It's a key tool for fighting terrorism.

Anything further?

Q How far along is the budget planning? And do you have a date yet
for the release of the budget?

MR. DUFFY: The budget is in production, I guess is the way to put it.
It is typically released the first or second week of February, and that
process is underway. I think one note about the budget, before we look
forward too much to next year's budget, is to celebrate what happened in
this year's budgeting process, in which we had an actual freeze on
non-defense and non-homeland security spending, and we also had some
significant reductions in growth in entitlement spending for the first
time since 1997, which are both key to helping cut the deficit in half
by 2009, as long as they are coupled with strong economic growth.

So one of the key principles in next year's budget will be to fund our
key priorities like winning the war, and domestic priorities like
education and health care, but also continuing to keep the budget on a
path that will result in cutting the deficit by 2009.

Q Trent, to follow up on that. Has the President issued any marching
orders about reducing the budget for fiscal '07 to, say, below the rate
of inflation in some areas? Any kind of marching orders at all?

MR. DUFFY: I think the marching orders are what I just described, which
are fund our nation's priorities, win the war on terror, keep the
economy strong, keep job creation growing, fund education and health
care, and those important priorities; but in other areas, slow the
growth so that we can continue to stay on the path to cut the deficit in
half by 2009.

Let's not overlook the fact that an important part of cutting the
deficit is strong economic growth, and the strong economic growth that
we've seen in 2005 has led to increased revenues in the treasury, some
$100 billion just this year alone. So it's those two priorities of
keeping spending in check while also keeping a strong economy that are
going to bring us toward our deficit reduction goals.